According to Sifted, Atomico’s 2025 State of European Tech report reveals that 40% of survey respondents now find it easier to hire and retain top talent, marking the highest level in five years. Europe’s tech professional pool grew 4% to 4.6 million people this year, with senior tech employees nearly doubling since 2016. The continent now has 2.7 million technical or engineering employees, growing at 11.2% annually compared to America’s 8.2%. Meanwhile, recruiters like Ellis Seder of Santa Monica Talent describe a market split between “AI and everything else,” with AI engineers seeing 20-30% salary increases to at least £140k annually. Some top AI companies are offering up to £700k for elite talent, creating a stark divide in the hiring landscape.
Two Europes emerging
Here’s the thing that data doesn’t capture: we’re basically seeing two completely different hiring markets develop simultaneously. On one side, you’ve got AI companies with massive funding rounds throwing around £250k salaries like it’s nothing. They’re vacuuming up what Seder calls the “top 1%” of talent. But if you’re not in AI? Good luck. Marketing, HR, and other departments are still struggling to replace people they laid off last year. It’s like we’re living in parallel universes where your hiring experience depends entirely on whether you’re building the next ChatGPT or, you know, literally anything else.
AI versus everything else
The numbers are staggering. £700k offers? That’s not just competitive – that’s insane money that distorts the entire market. But these offers are still rare, which means most companies are fighting over the remaining talent with much smaller budgets. Liv Parry from General Catalyst makes another interesting distinction: it’s not just AI versus non-AI, but AI-native versus AI-enabled companies. Senior engineers apparently prefer working on AI from the ground up rather than retrofitting it into existing products. So even if you’re using AI, you might still struggle if it’s not core to your identity.
The silver lining
There is some good news for companies outside the AI gold rush. All those layoffs and AI-driven efficiency gains have put more experienced operators back on the market. Parry notes that “lean, multi-purpose teams” are delivering great results with smaller, younger teams, which means there are actually more seasoned professionals available than you might think. The challenge is convincing them to join your company when they could be making bank at an AI startup. Authenticity becomes crucial here – founders need compelling stories about their vision, product, or market segment that feels real rather than hyped.
The reality check
So what does this mean for European tech long-term? We’re probably looking at a permanent stratification. AI companies will continue to attract disproportionate talent and funding, while everyone else has to get creative. This isn’t necessarily bad – it might force non-AI companies to focus on what really makes them unique rather than chasing trends. But it does mean the “talent shortage” narrative needs updating. There’s no general talent shortage – there’s a shortage of people willing to work for non-AI companies at non-AI salaries. And honestly, who can blame them?
